Retirement income

[Xiaosa1]

Assuming at age 40 years, Owns HDB fully paid. Single Has 250k warchest. The person can SAVE 150k per year. Being not a big risk taker. What are good retirement income sources.

Here are my thoughts:

1. Top up CPF SA to MAX for CPF LIFE
2. Blue chips and ETFs for dividends.
3. Buy additional private annuities. Looking at NTUC guaranteed life.
4. Bonds. Maybe goverment or/and SSBs

So retirement income will come dividends, coupons, CpF life and ntuc annuity monthly payouts.

 

[BBCWatcher]

1. Top up CPF SA to MAX for CPF LIFE

Certainly $7K/year makes sense for the tax relief. If this person has some room before hitting the CPF Annual Limit then I'd also top up Medisave (also for the tax relief). And I'd convert OA to SA.

2. Blue chips and ETFs for dividends.

No, not "blue chips." Those are individual stocks, and they are inherently risky. They are not appropriate given what you've related about this individual's risk tolerance, and they're likely redundant to ETFs.

What ETFs are you talking about?

3. Buy additional private annuities. Looking at NTUC guaranteed life.

No, it's not a good deal. Look at disability income insurance instead, if that's not already in place.

4. Bonds. Maybe goverment or/and SSBs

A Singapore Savings Bond is a terrific place to park emergency funds. Otherwise the CPF top-ups accomplish this portfolio role well, and age 40 is still quite young.

 

[laksa2003]

wow.. some dun even earn 50% of 150k a year and he can save 150k a year

 

[BBCWatcher]

wow.. some dun even earn 50% of 150k a year and he can save 150k a year

If you have no mortgage or rental payments, and if you don't do something silly (like buy and drive a private automobile), it's quite doable with $200K/year or less of take home income.

 

[Xiaosa1]

STI ETF and ABF Bond ETF. Why not blue chips like Singtel, Comfordelgro, DBS, OCBC. Assuming the person is ok with normal dividend investing. Just not stuff like shorting margins, contra and options. The idea is to diversify retirement income sources.

Certainly $7K/year makes sense for the tax relief. If this person has some room before hitting the CPF Annual Limit then I'd also top up Medisave (also for the tax relief). And I'd convert OA to SA.


No, not "blue chips." Those are individual stocks, and they are inherently risky. They are not appropriate given what you've related about this individual's risk tolerance, and they're likely redundant to ETFs.

What ETFs are you talking about?


No, it's not a good deal. Look at disability income insurance instead, if that's not already in place.


A Singapore Savings Bond is a terrific place to park emergency funds. Otherwise the CPF top-ups accomplish this portfolio role well, and age 40 is still quite young.

 

[BBCWatcher]

STI ETF and ABF Bond ETF.

That's very risky. Singapore is a very small country, and (in my view) being 100% invested in Singapore headquartered companies is not prudent. As I've said before, we can quibble about how much international exposure a typical investor ought to have, but zero (or near zero) is the wrong answer.

Why not blue chips like Singtel, Comfordelgro, DBS, OCBC.

You said this investor is concerned about risk. All he/she would be doing buying those shares is buying exactly the same shares that are held in the STI ETF, but overweighting them -- meaning, making that stock holding even more risky than it already is. That's very much the opposite of diversification.

Why would this investor want to buy a STI ETF and then buy, say, the top 10 individual stocks that already represent 50% or more of that same ETF's valuation? I don't get it.